State Codes and Statutes
Statutes > Connecticut > Title33 > Chap601 > Sec33-784Sec. 33-784. Shareholders' action. (a) Shareholders' action respecting a director's conflicting interest transaction is effective for purposes of subdivision (2) of subsection (b) of section 33-782 if a majority of the votes cast by the holders of all qualified shares are in favor of the transaction after (1) notice to shareholders describing the action to be taken respecting the transaction, (2) provision to the corporation of the information referred to in subsection (b) of this section, and (3) communication to the shareholders entitled to vote on the transaction of the information that is the subject of required disclosure, to the extent the information is not known by them.
(b) A director who has a conflicting interest respecting the transaction shall, before the shareholders' vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection (c) of this section, and the identity of the holders of those shares.
(c) For purposes of this section: (1) "Holder" means, and "held by" refers to shares held by, both a record shareholder, as defined in subdivision (7) of section 33-855, and a beneficial shareholder, as defined in subdivision (2) of section 33-855; and (2) "qualified shares" means all shares entitled to be voted with respect to the transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection (b) of this section is notified, are held by (A) a director who has a conflicting interest respecting the transaction, or (B) a related person of the director, excluding a person described in subparagraph (F) of subdivision (5) of section 33-781.
(d) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection (e) of this section, shareholders' action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.
(e) If a shareholders' vote does not comply with subsection (a) of this section solely because of a director's failure to comply with subsection (b) of this section, and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director, and may give such effect, if any, to the shareholders' vote, as the court considers appropriate in the circumstances.
(f) Where shareholders' action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the certificate of incorporation, the bylaws or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which action shares that are not qualified shares may participate.
(P.A. 94-186, S. 119, 215; P.A. 06-68, S. 12.)
History: P.A. 94-186 effective January 1, 1997; P.A. 06-68 amended Subsec. (a) by repositioning "director's conflicting interest", replacing "votes entitled to be cast" with "votes cast", inserting "action to be taken respecting the" in Subdiv. (1) and "to the corporation" in Subdiv. (2), replacing "required disclosure" with "communication" and "who voted" with "entitled to vote" and inserting "of the information that is the subject of required disclosure" in Subdiv. (3), and making technical changes, deleted former Subsec. (b) re qualified shares and former Subsec. (c) re action in compliance with section, redesignated existing Subsec. (d) as new Subsec. (b) and amended same by deleting provision re compliance with Subsec. (a), inserting "in writing", deleting provisions re identity of persons holding or controlling vote and re shares known to be beneficially owned or controlled by director or related person, inserting provision re shares known to be not qualified shares and identity of holders thereof, and making technical changes, added new Subsec. (c) defining "holder" and "qualified shares" and new Subsec. (d) re quorum and effect of presence of holders of, or voting of, shares that are not qualified shares, amended Subsec. (e) by inserting "in fact" re determination of vote outcome, deleting provision re further proceedings respecting Sec. 33-782(b)(3) and making technical changes, and added Subsec. (f) re satisfaction of transaction authorization requirements.
Annotation to former section 33-46:
Contract between director and corporation; when voidable; authorization, and ratification or estoppel, by stockholders. 104 C. 683.
Annotations to former section 33-323:
Cited. 151 C. 437. Cited. 153 C. 527. Cited. 168 C. 201. Cited. 186 C. 587. Cited. 229 C. 771.
Cited. 1 CA 656.
Subsec. (a):
Director's sale of stock and loans to corporation found not improper. 180 C. 199.
Subsec. (d):
Subdiv. (3): Director's sale of stock and loans to corporation found to be prima facie fair. 180 C. 199.
